While capped drawdown can continue, and some will see it as a sensible long term way of receiving a sustainable income, most will probably move towards a more flexible approach. Regrettably, for those currently on scheme pension there are no new options available, as the rules say the only alternative available to them is an annuity, which is unlikely to be a favourable option.
Finally, the new freedoms on the payment of death benefits will inevitably impact upon the drawing of pension benefits. The ability to leave money in the pension fund to be used to provide benefits to a beneficiary, free of inheritance tax, will appeal to the higher net worth individuals in SSASs. Additionally, although a SSAS is an occupational scheme, non-employees can be admitted once it is established, so beneficiaries can join the scheme on the death of a member to take advantage of the tax efficiencies now available, again making the SSAS the pension scheme of choice for the company owner-director.
Ian Hammond is managing director at Rowanmoor Group plc
